Growthink Blog

Successful Entrepreneurs Don't Do This


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I got home for work the other day and sat down with my family for dinner.

"How was your day?" I asked my kids. My kids proceeded to tell me about how their days went. Everything seemed like it was going well.

So, I asked my son, "Did you get to practice lacrosse today?" As a bit of background, my son plays on a highly competitive lacrosse team, and if he doesn't practice enough, he risks losing his position.

"No dad. I didn't have time," he replied.

Now this, unfortunately, is NOT an acceptable answer. In fact, according to Napoleon Hill, author of the famed book, "Think And Grow Rich," what my son gave me was an alibi (or excuse) for not succeeding.

In his final chapter, Hill listed 57 alibis for not succeeding. The list started with the following:

  • IF I didn't have a wife and family . . .
  • IF I had enough "pull" . . .
  • IF I had money . . .
  • IF I had a good education . . .
  • IF I could get a job . . .
  • IF I had good health . . .
  • IF I only had time . . .
  • IF times were better . . .
  • IF other people understood me . . .
  • IF conditions around me were only different . . .
  • IF I could live my life over again . . .
  • IF I did not fear what "THEY" would say . . .
  • IF I had been given a chance . . .
  • IF I now had a chance . . .
  • IF other people didn't "have it in for me" . . .
  • IF nothing happens to stop me . . .
  • IF I were only younger . . .
  • IF I could only do what I want . . .
  • IF I had been born rich . . .

Since I had just finished listening to the book (I constantly listen to books on tape while driving), the alibi "IF I only had time" was fresh in my head.

So, the correct thing to say to my son would have been, "You didn't have time. That's not an excuse. If  you really want to succeed at lacrosse, you would have made time."

But, I didn't say that for one simple reason. And that reason is that my son is just nine years old. He doesn't need that type of aggressive coaching, yet.

But you, each of you reading this today, to you, I will stand by giving you a hard time for making any of these alibis. And as importantly, I hold myself accountable for every time I say I don't have time or "if" this or "if" that.

These "ifs" are unacceptable. If each of us are going to achieve our true potential as entrepreneurs, we need to remove these alibis. We need to envision success, and create business and action plans to achieve it. And we must not stop there. Because our original business and action plans most like will NOT succeed.

Rather, we need to keep assessing our progress and modifying our plans until we achieve success. And never ever, along the way, can we get caught up in alibis. Since these alibis will kill our positive energy. They will take us down the wrong paths. And they will prevent us from achieving our goals.

For my son, I'll give him five more years until I get tougher on him and teach him to stop making alibis. For you and me, let's put our alibis behind us. And focus our energies on achieving massive success. And then, making sure the people we know and love also do the same.

Kim Kardashian, James Cameron's $500 Million Avatar, and Private Equity - A Parable


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Two pieces of startling news to consider when thinking about how money is really made in our brand-driven 21st century economy:

1. James Cameron's 3-D beyond blockbuster "Avatar" - reported by the New York Times' Michael Cieply to have a total budget - production and marketing - in excess of $500 million!

Director Cameron, of Titanic, is blowing away ALL movie cost records here. To give a feel of the size of the bet that Cameron, Fox, and private equity partners Dune Entertainment and Ingenious  Media, are taking on the film, Avatar may have to become one of the top-twenty grossing movies of ALL time just to break-even!

2. Ms. Kim Kardashian, kindly described by Wikipedia as "an American celebutante, socialite, model, actress, businesswoman, and television personality" is the 8th most followed person on Twitter. She trails only Ashton Kutcher, Britney Spears, Ellen Degeneres, Oprah Winfrey, and oh yes, the President of the United States.

This is relevant only because, whatever you think about the quality/lines of work and political leanings of others on the list, at least they have actually DONE SOMETHING to become famous.

Ms. Kardashian, for all of her obvious charms, is that particular modern phenomenon of seemingly being famous because she is, well, famous.

 

11-16 Blog Images


So You Say - So What?

Well, as any regular followers of mine can attest, at the core of my belief system and the Growthink investment strategy is the The Black Swan.

Popularized by the great Lebanese thinker and writer Nicholas Taleb in his New York Times bestseller of the same name, the idea of the black swan comes from the Enlightenment in Europe to describe a logical fallacy. In the 17th century, Europeans assumed that 'All swans must be white," because they had never seen a Black Swan. In the 18th Century, black swans were discovered in Australia. 

 

The logicians of the time - most prominently John Stuart Mill- associated the term "Black Swan" to the concept that a "previously perceived impossibility may actually come to pass."

Taleb describes it best:

"What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."

Taleb continues, "I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives."

Bringing it to November 2009, man who would have thought that a) a movie featuring a love story between 2 ten-foot tall blue aliens and b) a 29-year old actress with no major film or television credits or awards would have far more brand and marketing dollars and reach behind them than every single technology startup in the United States combined?

The answer: Nobody. And more importantly, the phenomenons of Avatar and Ms. Khardashian CANNOT - I repeat CANNOT - be retroactively analyzed for guidance as to what the next new thing will be. As Kim might say - "just don't go there."

So the true Black Swan acolyte does not look for guidance from past, outlier events, he or she does seek lessons. Here are three:


1) Everybody loves to place on a pedestal (and I put myself in this category for sure) the "pure" paths to entrepreneurial riches.  It goes like this: Have a great idea, start a company, have venture capitalists back you, build the business with blood, sweat, tears, and brilliance, go IPO, be featured on the cover of Fortune, and everyone lives happily  ever after.

It is what getting rich in America SHOULD be about. But the statistics tell a far different story. 

Think about the size of Avatar's reach - a $300 million production budget? $200 million for marketing? There probably aren't 10 technology startups in the whole world with these kinds of numbers behind them.

And the nice thing about a movie versus a startup is that you can usually find out in real-time if you have something. Don't you think the VC's with their full portfolios of "waking dead" startups would like to find out as Fox will with Avatar, in like 2 weeks, if they have something?

2) "Vanilla" investment in business models, in corporations, LLCs and the like, are almost passing into the realm of quaintness. I come back to my good friend Rafe Furst and his brilliant idea of the personal investment contract.

Investing in any one of Ms. Kardashian's various companies (perfume, clothing, DVD projects) is highly risky and on the surface, not all that attractive. But being able to invest in the Kim Khardasian personality brand  itself - with her top 1,000 website and 2.8 million Twitter followers (put this in perspective - Jim Kramer's Mad  Money gets about 300,000 viewers/day) - is a sure-fire moneymaker.

3) Bet on the Unexpected. Check your ego firmly at the door when evaluating business models and investment strategies. Accept that you (and everyone) for that matter KNOWS NOTHING about what the future will hold other than the fact that we don't know what the future will hold.

That is philosophy - here is money-making: The big, big outlier events - the 1,000 to 1 shots and beyond - are always, always, always, UNDER-PRICED in the marketplace. 

Bet on them. 


I look forward to your attendance and feedback.

Jay Turo
CEO
Growthink, Inc.


Business Plan Milestones: How They Are Essential To Your Success


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One of the absolute keys to a successful business plan is to create the right business plan milestones. Doing so is essential to securing investors and making real progress towards achieving your goals.

The story below illustrates the importance of business plan milestones, after which is some guidance regarding how you can create the right business plan milestones for your company.

There are lots of things that all of us do, and do as well as we have to, without thinking.

Like pumping gas.

I just pumped gas this morning. And thought nothing of it. Until now.

The fact is that I didn't just pump gas. Sure, the entire process of what I did was called pumping gas. But I did a lot of things that made up that process.

1. I pulled into the gas station.
2. I pulled next to a pump.
3. I put the car in park.
4. I turned off my engine.
5. I got out of the car.
6.  I popped open the gas flap.
7. I swiped my credit card into the machine.
8. I typed in my zip code.
9. I pressed the button for the type of gas I wanted.
10. I unscrewed the gas cap.
11. I took the gas nozzle out of the machine and stuck it into my gas tank.
12. I squeezed the lever.
13. I waited while the tank filled up.
14.  I put the gas nozzle back into the machine.
15. I pressed "no" I don't want a receipt.
16. I screwed my gas cap back on.
17. I shut the gas flap.
18. I got back in my car.
19. I turned on the engine.
20. I put the car in drive.
21. I drove off.

Wow. I did 21 things just to pump gas?

So who cares? Well, investors care. And partners care. And the success of your business cares.

Let me explain.

Your business is currently at point A. Where you want to go is to point B. Now getting from point A to point B requires you to complete milestones.

And the most important milestones are what I call "risk mitigating milestones." These are the milestones the help eliminate the risk of your company failing.

Let me give you some examples. For Google in its early days, risk milestones included completing their initial result ranking algorithms, getting customer to start using its search engine, and generating revenues.

Obviously once Google was generating a lot of revenues, it was not a very risky investment. But before customers starting using Google.com, it was very risky. And before its initial algorithms were developed, it was even riskier.

Every business has risk mitigating milestones. Investors obviously prefer to back businesses where more risk milestones have been removed. I know I do.

Would you prefer to back a restauranteur who just has a vision for a new restaurant; or would you rather back that same restauranteur after the ideal location has been determined, the restaurant has been built, the staff has been hired and trained, the local newspapers have given it a great review, and the restaurant now has 250 loyal patrons and is booming every night?

It is your job as an entrepreneur to identify your risk mitigating milestones. And not only do you have to identify them, but you need to prioritize them. So that every day you are spending quality time working to accomplish them (and not spending time doing things like replying to emails that seem to be adding value; but which don't actually put you closer to accomplishing your risk milestones).

But, actually, you can't work on completing your risk mitigating milestones each day until you break up each of these milestones into much smaller projects. For example, Google creating its initial algorithm and a restauranteur finding an ideal location are great milestones, but way too large to accomplish on a daily basis.

Each milestone needs to be broken down into numerous chunks; chunks that can be completed every day, and progress made. It's like writing a book. If you write one page every day, by the end of the year, you'll have a 365 page book.

And it's like pumping gas. You need to do a ton of smaller things in order to accomplish the big thing. And like with pumping gas, when you spend the time breaking the task into pieces, you often see how easy each piece is to accomplish.

Developing risk mitigating milestones is an absolutely essential component of your business plan, and belongs in your Operations Plan section. Investors need to understand these milestones and your projected timeline for accomplishing them. You need to understand them to prioritize your time and hire the right people at the right time.

If you still need to complete your business plan, let me send you my CD with seven more essential business plan secrets. I explain why I'm doing this and how you can get it now, on this page right here:
http://www.growthink.com/seven-secrets

 

 


November 9, 1989 - The Proper End of History


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Passing with surprisingly little fanfare, today is the 20th anniversary of the fall of the Berlin Wall.

One of my most enduring memories of my college days (I was an International Relations Major at Stanford, Class of 1990) was a class that I took from an extremely engaging and charismatic young professor on Soviet Foreign Policy.

One statement that my professor made stayed with me - that probably none of us in our lifetimes would see the Berlin Wall fall.

Her reasons:

a) The inevitable brain and talent drain that an opening of the wall would bring about

b) The more that people in the old Soviet republics and in Eastern Europe were allowed to see with their own eyes the freedom and prosperity that liberal capitalism creates, the more likely they would be to rebel against their masters.

Thus, the Soviet leadership, out of pure and obvious self-interest, would never allow it to happen.

Well, the rest is history.  Six months after this perhaps off-hand classroom statement, the Berlin Wall came down. And 15 years later, my young and charismatic professor - Condoleezza Rice - was named the 66th United States Secretary of State.

I am not exaggerating when I say that of all of my college experiences and memories (at least the ones I can remember..:), that that day and that class and Professor Rice's statement stayed with me.  Why?
1. It inculcated in me at a very early age that the future is very, very uncertain, and that there is often little correlation between the depth of one's understanding of a topic and the ability to PREDICT about it.  

Professor Rice KNEW the Soviet Union - even then she was considered one of the nation's most knowledgeable and versed thinkers and commentators on topic.  And yet she, like so many others, was wildly wrong here.

2. While I could not put it into words until last year when my good friend and perhaps best thinker on "systems of prediction" I know - Rafe Furst - introduced me to Nicholas Taleb's masterpiece "The Black Swan," I and many others intuitively felt that something VERY, VERY, VERY outside of the realm of prediction took place the day the wall fell.

3. And more deeply, BECAUSE it fell outside the realm of prediction, it MATTERED.  The "smell test" on these kinds of moments are simple - they are the ones we remember where we were when we first heard about them.

For my generation - The Space Shuttle Disaster (and Reagan's incredible speech that night), The 1987 Stock Market Crash, the fall of the Berlin Wall, Clinton's impeachment, September 11th, the capture of Saddam, and the fall of Lehman (for those of more business/financially-minded) fall into this category.

My friend Rafe and Taleb tie this core life insight to business and investing.

How? By only wagering on the unpredictable. Raynor in the Strategy Paradox makes the same point.  BIG success and BIG money are only made on the BIG outliers - everything else is just transom.

In a strange way, the fall of the Berlin Wall was a seminal event in my youth that pointed me to my life's work. It affirmed by belief in liberal capitalism and in the "way of the West" as the  right and proper end of history.
And in business, it led me to entrepreneurship and to private equity.

Why?  Because it is in the aspirations of the entrepreneur and of their backers  that the power of the unpredictable is made most real in business.

Those that grasp it - the Bezos, the Brins, the Pages, the Josh James of Omniture, the Aaron Patzers of Mint.com, the Kevin Planks of Under Armour, MAKE history. 
And hopefully take the rest of us along for the ride.

I look forward to your attendance and feedback.

Jay Turo
CEO
Growthink, Inc.

Top 7 Business Plan Secrets [New CD]


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I recently recorded a CD with my 7 best business plan secrets.

This new 54-minute CD reveals my 7 best-kept secrets for how you can create a successful business plan that attracts capital and positions your company for success.

Get all the details here.

After listening to my CD, you'll be far ahead of your competition because you'll have critical knowledge and skills, such as:

- How to make sure your business plan actually gets read
- Why having lots of competitors can be a GOOD thing
- What investors really look for in your business plan

...and more time-tested strategies that I've used to help Growthink clients raise millions of dollars in capital, build ultra-successful businesses, and achieve multi-million dollar exits.

You can get all the details, here: http://www.growthink.com/seven-secrets


Kidpreneurs: Teaching Kids About Entrepreneurship


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The other day, Adam Toren of YoungEntrepreneur sent me an advance copy of his new book, Kidpreneurs.

If you've got kids, this is a fantastic book to share with them.

Watch my video review of the book below:


Startup Business Financing: Why Diversification Is Critical


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This past Sunday, CIT Group Inc., the 101-year-old commercial lender, filed for bankruptcy.

This filing is NOT good for American businesses, as CIT Group funds, via providing loans and working capital, about 1 million businesses.

CIT's bankruptcy will not only prove difficult for the small and medium-sized businesses that rely on CIT's working capital loans. But, it hurts the thousands of startups who planned to approach CIT for startup business financing; with the bankruptcy, it is highly unlikely that CIT will be able to make the same number of new loans as before.

It is for reasons such as this, that I frequently preach that businesses leverage multiple forms of capital. In fact, you've probably heard me talk of companies like Google, who leveraged credit cards, angel capital, venture capital and bank loans in its early days.

One form of startup business financing is never enough. It's the classic "putting all of your eggs in one basket." In addition to the risk involved in this strategy, it is also typically less expensive to diversify your financing. For example, bank loans used for the purchasing of equipment is almost definitely less expensive than using equity financing for the same expenditure.

Personally, my favorite forms of capital are creative/alternative financing (since it is easy to raise if you know what to look for), angel financing (also easy to raise if you know how to do it) and bank financing (easy to raise if your business is a good fit for it).

I'm also a big fan of venture capital and grant financing, but these forms of capital take a little longer to raise and are more challenging (but the rewards are significant if you are successful).

To become an expert in raising each of these forms of capital, learn more with the links below:

Growthink's Definitive Guide to Creative & Alternative Financing Sources
presents 28 proven creative and alternative sources of capital to fund your new or growing business.

Growthink's Step-By-Step Guide to Raising Capital from Angel Investors will guide you through the process of raising money from individual "angel" investors.

Growthink's Step by Step Guide to Raising Capital From Banks and SBA Lenders will teach you how to quickly and easily get the right SBA and/or bank loan to fund your business.

Growthink's Step-By-Step Guide to Raising Venture Capital presents our proven system for raising venture capital for your business on favorable terms.

Growthink's Step-By-Step Guide to Raising Capital from Grants will guide you through the process of winning grants to fund your business.

Google. Omniture. Mint.com - What Do They Have in Common?


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Google. Omniture. Mint.com. All massive private company investing success stories and all shared some critical characteristics:

1. They all took a while to blossom. In the case of Omniture, it was 13 long years from company founding to exit last week via sale to Adobe for $1.8 billion.

2. Those that made the most money by far were those that got in early. Sure, it would have been great to have owned Google at its 2004 IPO price of $85/share, but some of the FIRST investors in Google in 1998 bought their shares - on a split-adjusted basis - at eight CENTS/share.

3. All had/have great leaders. Josh James, founder and CEO of Omniture, has led his company through a failed acquisition, through having to lay off 3/4 of the company's employees a week before Christmas, an IPO, and attracting the best software talent far from Silicon Valley (in Omniture's case, suburban Utah).

4. Lady luck smiled on them. In the case of Mint.com, Intuit's inability to move their key personal financial software apps to the "cloud" (in spite of having 100 x more software developers working on it than Mint) was the key stroke of luck that led to Intuit buying them in September for $170 million.

The key question with luck, always, is how we can make it work for us. And the stories of Google's, Omniture's, and Mint.com's success point the way.

I look forward to your attendance and feedback.

Jay Turo
CEO
Growthink, Inc.


How To Motivate Your Employees


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Entrepreneurs must have many skills. They must be able to spot opportunities. They must be able to create plans to seize those opportunities. And they must execute on those plans.

And, for most opportunities, and clearly for those opportunities that are really big, execution involves hiring and managing employees. Because no single entrepreneur can do everything themselves.

But you just can't have any employees. Companies that succeed have employees that are highly motivated.

So how do you ensure that your employees are motivated to succeed?

Clearly, giving them fair salaries helps. And clearly, stock options that allow employees to benefit when the company benefits are good practice.

But, there is an even better way. In fact, authors Adrian Gostick and Chester Elton in their book, The Carrot Principle, found a better way.

Where did they come up with this better way? Well, they conducted a study involving 200,000 people over a ten-year period.

Importantly, their study showed that the key characteristic of the most successful entrepreneurial managers is that they provide their employees with frequent and effective recognition.

That's right, significantly better business results were realized when managers offered recognition in the form of constructive praise and meaningful rewards (typically non-monetary).

The authors found that recognition is most effective when it is:

  • Positive (don't mention any negatives when giving praise)
  • Immediate (comes soon after the job well done)
  • Close (presented to employee(s) with their peers in attendance)
  • Specific (precisely recognizes why the task/job they performed merited recognition)
  • Shared (allows employee's peers to also comment during the recognition presentation)

 

Carrots are needed to motivate employees. But what I found most interesting about the author's findings was that recognition is more effective than monetary rewards. This is a critical finding for all managers, and particularly entrepreneurial managers who typically operate in cash-restrained environments.

The authors created a "Recognition Frequency Log" that you can use to keep track of how you recognize your employees and for what. You can download it here: http://carrots.com/managers_tools/downloads/recognition_frequency_log

Knowing how to motivate your employees will allow you to build a team that is as passionate about success as you are. And this will ultimately lead to your company achieving its goals. So, while it may not seem like a mission-critical focus today, it's definitely worth your time and effort. So don't delay...


Growthink Celebrates 10 Year Anniversary


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This past Thursday, Growthink celebrated its 10 year anniversary with a reception in Los Angeles.
 
Thanks to all our friends, clients, and colleagues who were able to join us!
 
Here are some photos from the event:
 
 
 
Above: Jay Turo, Co-founder and CEO of Growthink
 
 
 
Above: Dave Lavinsky, Co-founder and President of Growthink
 
 
 
Left: Jay Turo; Right: Dan Hyman, Founder and CEO of XCOM Wireless
 
 
Left: Ken Jillson, Founder of Safari Air; Right: Melissa Welch of Growthink
 
 
 
Left-to-Right: Growthinkers Stacey Polychronis, Rocio Melgar, and Brittany Lawson
 
 
Click here to view more photos from Growthink's 10 Year Anniversary Celebration.

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